Losses from Trade?

Karl Smith has an interesting idea about trade, explained here discursively and with a link to his paper in progress here. The traditional Ricardian theory of gains from trade applies in the case of certainty: those who benefit from liberalized trade will have sufficient benefits that they could (theoretically) compensate the losers and still end up better off, so trade is Kaldor-Hicks efficient ex post. But in a world with uncertainty (and with incomplete insurance markets), liberalization of trade can be Pareto inefficient ex ante. That is, the increased risk to everyone could be such a disadvantage that it outweighs the average expected gains and makes the contemplated liberalization a net disadvantage to everyone involved.

The same could presumably be said for any change that increases uncertainty, which might include technological change. I have a vague, intuitive sense that trade introduces more uncertainty than does technological change, but right now I don’t have any evidence to support that idea.